Q. 155.0( 1 Vote )

Explain the impli

Answer :

A)A large number of seller:

● It implies that the number of firms is so large that they are enough so that contribution to the total output of the industry by any firm individually is negligible.


● No single firm is in a position to influence the price in the market on its own by changing its own output.


● So, the price remains constant.


B) Homogeneous products:


● It means that the buyers treat products of all the firms same i.e, homogeneously.


● No firm can charge a higher price, because then the price will stop purchasing it from him, and may shift to another seller.


● The market price remains the same for all the firms.


OR


a) Barriers to entry of new firms:


● The barrier to entry of new firms allows only a limited number of firms into oligopoly industries.


● These barriers can be the patent rights, availability of certain raw materials etc.


b) A few or few big sellers:


● It implies that each big seller contributes a large share of the total output.


● This gives the individual seller the power of influencing the market price by changing its own output.


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